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Avoid CRA scrutiny

Every taxpayer fears the day when they get a letter saying they are being audited. While some audits are random, the CRA has discovered that targeted audits are better at identifying non-compliance. Therefore, they tend to focus their audits on high-risk areas. Knowing this, taxpayers can reduce the risk of an audit by avoiding red flags. For instance, one red flag is filing an adjustment (T1-ADJ Form). Other types of activities are listed below. Due to the time and hassle involved with an audit, the best advice is to ensure your return is completed properly the first time.

Key Takeaways:

  • Failing to respond to the CRA if they reach out to you will significantly increase your risk of being audited.
  • It is important to take care when reporting net losses in a business or rental property for multiple years.
  • Notable changes in income, your reported income doesn’t match your home’s value or if you sold real estate in the last year might cause the CRA to take a closer look at you and investigate further.

“While some audits are still random, a new approach by the CRA was undertaken following a study that found that random audits detected far fewer cases of significant non-compliance versus targeted ones.”

Read more: https://www.castanet.net/news/It-s-Your-Money/253970/Avoid-CRA-scrutiny

By |2020-02-04T08:27:08-07:00February 11th, 2020|Commentary|0 Comments

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